In his quest (which seems to have worked) to take Newt Gingrich out of the Republican presidential race, candidate Mitt Romney sought to highlight the former Speaker’s ethical woes in the 90s when he was a member of Congress. In what I think is an unusual political ad, the Romney campaign turned to former NBC News anchor Tom Brokaw to make the case. You can watch the ad, dubbed “History Lesson”, here.

The ad features little more than an image of a television on a plain gray background. On the television is a clip of Tom Brokaw from a broadcast of NBC Nightly News which aired on January 21, 1997, in which he reported that Congress had found Gingrich guilty of ethics violations. At the end of the brief report, the candidate in voice over utters his approval of the ad while a Romney for President still appears on screen. About six seconds from the end, the ad displays the words “Paid for by Romney for President, Inc; Approved by Mitt Romney.”

Brokaw criticized the use of his image in the ad, stating “I am extremely uncomfortable with the extended use of my personal image in this political ad. I do not want my role as a journalist compromised for political gain by any campaign. NBC has also called upon the Romney campaign to stop running the ad. The Romney campaign has resisted thus far, arguing that the use of the image is protected under the fair use doctrine. We’ve written about parody, one form of fair use, here.

How does this ad stack up on the fair use scale? Let’s start by going over the nearly alliterative four fair use factors. The four factors, codified in the Copyright Act at 17 U.S.C. §101 are:

1. The purpose of the use, such as whether it is for commercial or nonprofit purposes;

2. The nature of the underlying copyrighted work;

3. The amount of the copyrighted work copied; and

4. The effect on the market or value of the copyrighted work.

It being a political ad, the first factor probably goes in Romney’s favor. And given that we’re talking about a clip of less than thirty seconds from fifteen years ago, the fourth probably favors Romney as well, largely because it seems unlikely that the clip has much value left. And then there were two.

So, what is the underlying copyrighted work? The clip is simply the anchor and a photo of Gingrich. Although the thrust of the report is the finding of guild by Congress, the report also includes information about Gingrich’s successful efforts to bring down Speaker Jim Wright on ethics charges several years earlier. But, there is nothing about the clip itself that suggests that NBC or Brokaw intended to editorialize the report on Gingrich. In fact, it’s probably safe to assume that neither NBC nor Brokaw would suggest that the report was an attempt to editorialize on the subject. So, if there is no editorializing, is there any protectable expression? The facts themselves are clearly not protectable, so what would be left?

The third factor, the amount of the work used raises an interesting question. The ad features roughly thirty seconds of a broadcast lasting nearly thirty minutes. If we define the copyrighted work as the entire broadcast, then a thirty second clip does not seem substantial. But is that the right way to look at it? It certainly appears that the clip encompasses the entirety of NBC’s reporting on the Gingrich story. Viewed in this more limited fashion, one could argue that the entirety of the copyrighted work is used.

On our informal fair use scorecard, it looks like Romney would have the better argument, but are there other arguments that NBC and Brokaw could make? For example, could Brokaw assert a claim based upon a right of publicity? Could NBC make a claim for false designation of origin? We’ll leave those questions for another time.

In our discussion of SOPA and PIPA, which can be found here, we noted that SOPA/PIPA would alter the existing enforcement landscape by placing a larger burden of policing infringement on ISPs than current law, the Digital Millenium Copyright Act (“DMCA”) requires. A recent decision by Judge Sweet in the United States District Court for the Southern District of New York reinforces the DMCA’s safe harbor provisions and the requirement of content owners to police infringement.

At the heart of the DMCA is the safe harbor provision. We discussed the safe harbor in some detail here. When an ISP or website qualifies for protection under the safe harbor provision, the ISP or website is relieved of the burden of preventing potentially infringing content from being uploaded on its website or server. Instead, under the DMCA, content providers have the onus of policing infringing content on the internet and providing adequate notice to the ISP or website.

In Wolk v. Kodak Imaging Network, Inc., plaintiff Sheila Wolk, a visual artist, sought to a preliminary injunction against the website Photobucket from infringing her copyrights. Plaintiff alleged that several of her copyrighted images were uploaded to Photobucket without her permission. Plaintiff served several DMCA takedown notice to Photobucket demanding that the website remove her copyrighted work. A notice served under DMCA must, among other things, provide the identity and location of the allegedly infringing conduct.

Consistent with its obligation under the DMCA, Photobucket removed content in response to notices from Wolk that properly identified the nature and location of the infringing material. Wolk, however, asserted that she was not required to provide DMCA compliant notices because her prior notices placed Photobucket on notice of infringing content on its website.

Close still only counts in horseshoes, though, and Judge Sweet rejected Wolk’s invitation to adopt an approach that would shift the burden of policing infringing content onto Photobucket. The ruling is consistent with other cases on this issue and further reinforces the DMCA’s safe harbor mechanism and the burden on content owners to police acts of infringement. Whether a renewed push for legislation similar to SOPA/PIPA will change things remains to be seen.

To achieve full compliance with the Berne Convention for the Protection of Literary and Artistic Works (the “Berne Convention”), in 1994 Congress amended the Copyright Act to remove certain foreign works from the public domain.

Prior to the 1994 amendment, the United States did not recognize copyright for foreign works in three distinct categories: 1) from countries where the United States had no formal copyright relationship; 2) where the foreign works failed to comply with copyright formalities under U.S. law; and 3) for sound recordings fixed prior to 1972 which had no protection in the U.S. The amendment, therefore, had the effect of suddenly transforming large amounts of public domain material into protected works.

In Golan v. Holder, a diverse array of individuals, including orchestra conductors, educators, publishers and performers challenged Congress’ action. Prior to 1994, petitioners had enjoyed the opportunity to exploit foreign works in the public domain and to create derivative works based upon them without the need to seek permission or to pay a fee. Justice Ginsburg, writing for a 7-2 majority, rejected plaintiffs’ arguments that Congress exceeded its authority under both the Copyright and Patent Clause (Art. I, Sec. 8, cl. 8) and the limitations imposed by the First Amendment.

According to the petitioners, once a work has passed into the public domain, Congress no longer has authority to create a new term of copyright protection. The majority, however, easily dismissed this argument. The Court first pointed out that the text of the Copyright and Patent Clause of the Constitution did not limit Congress’ authority as petitioners argued. The majority also held that the Court’s prior precedent in Eldred v. Ashcroft foreclosed petitioners’ argument. Eldred considered whether Congress had the authority to extend the copyright on existing works pursuant to the Copyright Term Extension Act (“CTEA”). The Eldred Court refused to read the “by securing for a limited time” in the Copyright and Patent Clause to prescribe Congress from extending the term of existing copyrights. Since, like the CTEA, the 1994 amendments established a limited period for which the foreign works would now enjoy copyright protection, Congress acted squarely within its authority.

The majority also rejected petitioners’ First Amendment argument. Turning once again to Eldred for guidance, the Court explained the tension that exists between copyright protection and the First Amendment. The majority observed that copyright protection naturally acts as a restriction on expression. At the same time, however, the Court also recognized that the framers of the Constitution considered copyright protection as “an engine of free expression” by providing an “economic incentive to create and disseminate ideas.” Copyright protection extends only to the expression of an idea, not the idea itself. The distinction between ideas and expressions, according to the majority, strikes an appropriate balance between the sometimes competing interests of the Copyright Act and the First Amendment. Finding that the the balance between these competing interests was not altered, the majority held that the First Amendment was not offended by the 1994 amendments.

In dissent, Justices Breyer and Alito emphasized their view their view that the primary objective of the Copyright and Patent clause was to promote the creation of new works. The protection afforded to foreign works in the 1994 amendment, in their estimation, would not lead to the creation of new works. Going a step further, the dissent posited that the extension of copyright protection at issue in Golan actually inhibited the creation of new work. Since that runs contrary to the nature of Congress’ authority under the Constitution, the dissent would have struck down the amendment.

In Part 1 of our analysis of SOPA/PIPA we reviewed the enforcement mechanisms in context with existing law. Following extensive protests, including the blackout of Wikipedia, Reddit, and others, Congressional support for SOPA and PIPA has quickly eroded. While these specific bills are not likely to ever hit the floor of the House and the Senate, it would be naive to assume that the issue will simply fade away. So, in Part 2 of our look at SOPA/PIPA, we will look at three specific criticisms that led to the massive protests and, ultimately, the demise of the bills.

The Electronic Frontier Foundation has objected to the sections in the bills that immunize companies for taking voluntary action against suspected infringers, dubbing it the “vigilante” provision. Consider a parody. A parody uses copyrighted material to poke fun at an artist, style, or genre. By necessity, a parody requires an artist to copy the original work. Courts grapple with parodies and other fair use defenses all the time. I’ve discussed fair use here, and here. The immunity provision empowers ISPs and search engines to take judicial action to determine what is and what is not fair use.

The Center for Democracy and Technology has pointed out that certain provisions of the bill would force websites with user-generated content to concoct expensive monitoring devices to root out infringement. Specifically, a website can run afoul of SOPA/PIPA if they take “deliberate actions to avoid confirming a high probability” of infringing conduct. It is debatable whether the failure to take affirmative steps to monitor infringement would amount to deliberate avoidance. However, the answer to that question could have enormous consequences on cloud computing providers, particularly the willingness of investors to fund new infrastructure.

Finally, the Electronic Frontier Foundation has also argued that existing security software could be illegal under SOPA/PIPA. Developers of proxy, privacy or anonymization software could be required to develop mechanisms to block access to websites shut down under SOPA/PIPA or face action by copyright owners or the Justice Department. The bills do provide for an opportunity to argue that such mechanisms would be technically infeasible, but the viability of such arguments could only be resolved by a Court in litigation.

Today, Wikipedia, WordPress, and other internet sites have gone dark to protest H.R. 3261, known as the Stop Online Piracy Act (“SOPA”) and S. 968, the Protect IP Act (“PIPA”). Both bills are intended to combat intellectual property piracy on the internet. For the most part the bills are the same. You can read about differences here. So what’s all the fuss about?

Let’s start by looking at current law. The Digital Millenium Copyright Act (“DMCA”) targets infringing content on the internet. Internet sites, such as YouTube, can operate under a safe harbor that protects them from liability, provided that they promptly remove infringing content upon receipt of a takedown notice from the content owner. The DMCA, in essence, places the burden on content owners to police each act of infringement and targets only the infringing conduct. How do SOPA and PIPA fit in?

The bills empower the Attorney General to take action against foreign internet sites that direct infringing content to U.S. based users. In addition, the proposed law would require search engines, advertising networks, and payment providers to refrain from servicing the infringing foreign sites. In contrast to the DMCA provisions, the Attorney General has the burden to take action against infringement. Moreover, the legislation targets the entire website, not just the infringing content. The bills also provide immunity for voluntary conduct intended to prevent the dissemination of infringing content.

After convincing a Federal Judge in California that the fair use doctrine protected its use of artist Dereck Seltzer’s work Scream Icon in a video backdrop during its live show, Green Day scores again by prevailing on a claim for attorneys’ fees.

Normally, you can’t get attorneys’ fees for winning a lawsuit, no matter how ridiculous the position taken by the other side. The Copyright Act, however, specifically allows for the winner of a copyright case to recover fees at the discretion of the District Court. Courts typically use these factors in exercising the discretion to award fees: the level of success obtained, frivolousness of the claim or defense, motivation, the need for deterrence, and the objective reasonableness of the claim or defense.

At the outset, let’s recognize that Seltzer — a copyright owner — ends up paying the attorney fees for Green Day — an alleged infringer. This may seem an unjust result. In fact, for a number of years, some courts held that attorneys fees could never be awarded against a party pursuing a claim of infringement. The Supreme Court put a stop to that line of cases in Fogarty v. Fantasy, 510 U.S. 517 (1994), holding that since the Copyright Act makes no distinction between prevailing plaintiffs and prevailing defendants, courts could not establish a different set of rules to award fees for copyright owners and alleged infringers.

The Seltzer Court held that nearly all of these factors weighed in favor of awarding fees. By prevailing in its fair use defense, the Court held that Green Day had secured a significant victory by making it possible for others to “manipulate and reinterpret street art in the creation of future multimedia compilations.” The Court further noted that Green Day had prevailed on the merits of each of its claims. Because Seltzer failed to raise a triable issue of fact and because his positions were contrary to established law and factually unreasonable, the Court held that Seltzer’s claims were objectively unreasonable.

The RIAA strategy of instigating civil suits against individuals engaged in illegal downloads has resulted in some extremely large damage awards. Some courts have expressed concern at the size of the awards and are taking steps to scale back awards.

FIrst, some background. To relieve copyright owners of the burden of proving actual damages, which may be difficult in many cases, the Copyright Act provides for the imposition of statutory damages. 17 U.S.C. §504(c). Each act of infringement is subject to a minimum of $750 and a maximum of $30,000. 17 U.S.C. §504(c)(1). If the copyright owner proves that the infringement was willful, the maximum damage award increases to $150,000. Since each act carries a separate damage award, it’s pretty easy to see how online piracy cases can result in huge damage awards.

Two examples. In Massachusetts, a jury held a student liable for infringing on the copyrights of thirty recordings through illegal file sharing. A jury award of $22,500 per recording results in a total verdict of $675,000. In Minnesota, a jury awarded a whopping $1.92 Million in a case involving twenty four recordings. That’s $80,000 per recording. Both juries found the defendants acted willfully in infringing the copyrights, but only the Minnesota jury chose to award damages in excess of $30,000 as permitted in cases of willful infringement. In both cases, the juries awarded damages consistent with the Copyright Act and based upon their collective judgments about the defendants’ willful conduct. That said, it is safe to assume that neither defendant has the ability to satisfy the judgments rendered.

In each case, the trial judge believed that the jury verdicts were clearly excessive. But what could they do about it? Turns out, there are two options.

First, courts have long had the power to alter jury awards that they find grossly excessive or shocking to the conscience. Under this procedure, known as remittitur, the trial judge reduces the jury award to an amount she deems reasonable and offers the prevailing plaintiff a choice: accept the reduced award or face a retrial solely on the issue of damages. Although the labels have argued that remittitur is not available in a case of statutory damages, there does not appear to be any merit in this argument. See, Capital Records v. Thomas-Rasset, 680 F. Supp. 2d 1045 (D. Minn. 2010).

Where remittitur fails, due process may provide a fallback option. The Supreme Court in St. Louis v. Williams, 251 U.S. 63 (1919) established a standard to determine whether a statutory award satisfies due process. Under Williams, a statutory award satisfies due process if it is not “so severe and oppressive as to be wholly disproportioned to the offense or obviously unreasonable.” Id., 251 U.S. at 67. The Williams Court identified three broad standards for courts to consider when deciding the due process implications of a statutory damages award: 1) the public interest; 2) the opportunity for numberless opportunities to commit the offense; and 3) the need for uniform adherence.

In Capital Records, Minnesota District Court, our Minnesota example, looked at whether a $1.5 Million award in a new trial following an order of remittitur against an individual violated due process under the Williams standard. Applying the Williams factors in this case seemed to favor the record labels. It’s pretty easy to conclude that there is a public interest in preventing widespread copyright infringement through illegal downloads and the very nature of the file sharing sites provided countless opportunities for continued infringement and call for the need of a uniform adherence. The Court also recognized the need for deterrence against future widespread copyright infringement.

Despite that, the Court in Capital Records still reduced the award from $1.5 Million to $54,000. The Court seems moved by two factors. First, this individual is one of millions of people who have committed copyright infringement through file sharing. The $1.5 Million verdict would have the affect of holding one individual responsible for the acts of many others. Second, this was an individual, not a corporation, and thus without the means to satisfy such a large verdict.

So, how do you get to $54,000? The Court determined that the appropriate measure of damages per act was $2,250 or three times the minimum statutory award of $750. $2,250 x 24 = $54,000/ There is nothing in the Copyright Act that sanctions treble damages, but as the Court cited, treble damages are frequently used in other legal contexts, such as a measure of punitive damages or willful conduct.

The Capital Records Court was also influenced by Sony BMG Music Entertainment v. Tenenbaum, 721 F.Supp. 2d 85 (D. Mass. 2010), which was the Massachusetts example above. The District Court in that case also held that $2,250 was the maximum amount a jury could award against an individual consistent with due process. That decision, however, was reversed by the First Circuit because the District Court failed to first order remittitur. Sony BMG Music Entertainment v. Tenenbaum, Nos. 10-1883, 10-1947, 10-2052 (1st Cir., September 16, 2011).